Boeing 2010 Annual Report Download - page 46

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Network & Space Systems
Operating Results
(Dollars in millions)
Years ended December 31, 2010 2009 2008
Revenues $9,455 $10,877 $11,346
% of Total company revenues 15% 16% 19%
Earnings from operations $ 711 $ 839 $ 1,034
Operating margins 7.5% 7.7% 9.1%
Research and development $ 417 $ 397 $ 298
Contractual backlog $9,586 $ 7,746 $ 8,868
Unobligated backlog $8,435 $ 9,187 $16,981
Revenues N&SS revenues decreased 13% in 2010 and 4% in 2009. The decrease of $1,422 million in
2010 is primarily due to lower volume on the BCTM and GMD programs. The decrease of $469 million
in 2009 is primarily due to lower volume on the GMD, Intelligence and Security Systems, and
Proprietary programs, partly offset by higher volume on several satellite programs.
Delta launch and new-build satellite deliveries were as follows:
Years ended December 31, 2010 2009 2008
Delta II 112
Delta IV 11
Commercial and civil satellites 331
Military satellites 13
Operating Earnings N&SS earnings decreased by $128 million in 2010 primarily due to lower
revenues. N&SS earnings decreased by $195 million in 2009 primarily due to lower revenues and
charges related to the Sea Launch bankruptcy. Earnings in 2009 were also reduced by charges related
to the settlement of a satellite contract dispute and indemnification of Delta II inventory. Earnings in
2008 included a favorable settlement on a civil satellite program. N&SS operating earnings include
equity earnings of $189 million, $164 million and $178 million from the United Space Alliance joint
venture and the United Launch Alliance (ULA) joint venture in 2010, 2009 and 2008, respectively.
Research and Development The N&SS research and development funding remains focused on the
development of C4ISR that support a network-enabled architecture approach for our customers. We
are investing in capabilities to enhance connectivity between existing and new air/ground and maritime
platforms, to increase communications availability, utility and bandwidth through more robust space
systems, and to leverage innovative networking and ISR concepts. Investments were also made
to develop concepts and capabilities related to cyber and security products, as well as the
development of next-generation space and intelligence systems. Along with increased funding to
support these network-enabled capabilities, we also maintained our investment levels in missile
defense, directed energy and advanced exploration systems.
Backlog N&SS total backlog increased 6% in 2010 compared with 2009 primarily due to two
commercial satellite contract awards, a multi-year contract award on the International Space Station
program and GMD contract awards, partially offset by revenues recognized on the BCTM program.
Total backlog decreased by 34% in 2009 compared with 2008 partly due to the partial termination for
convenience by the U.S. Army of the BCTM System Development and Demonstration contract related
to Manned Ground Vehicles and associated systems and equipment. 2009 deliveries and sales on
multi-year contracts awarded in prior years including BCTM, GMD, and Proprietary programs also
contributed to the backlog reduction.
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